[Rick James]

Clicky.


For those who forgot their high school history class, perestroika is a Russian term that translates as "restructuring" and is used to describe the period of Soviet reform in June 1987 which eventually ended the Cold War and dismantled Communist Russia.

Years ago, as the Cold War was coming to an end, I said to my fellow leaders around the globe: The world is on the cusp of great events, and in the face of new challenges all of us will have to change, you as well as we. For the most part, the reaction was polite but skeptical silence.

In recent years, however, during speaking tours in the United States before university audiences and business groups, I have often told listeners that I feel Americans need their own change -- a perestroika, not like the one in my country, but an American perestroika -- and the reaction has been markedly different. Halls filled with thousands of people have responded with applause.

Over time, my remark has prompted all kinds of comments. Some have reacted with understanding. Others have objected, sometimes sarcastically, suggesting that I want the United States to experience upheaval, just like the former Soviet Union. In my country, particularly caustic reactions have come from the opponents of perestroika, people with short memories and a deficit of conscience. And although most of my critics surely understand that I am not equating the United States with the Soviet Union in its final years, I would like to explain my position.

Our perestroika signaled the need for change in the Soviet Union, but it was not meant to suggest a capitulation to the U.S. model. Today, the need for a more far-reaching perestroika -- one for America and the world -- has become clearer than ever.

It is true that the need for change in the Soviet Union in the mid-1980s was urgent. The country was stifled by a lack of freedom, and the people -- particularly the educated class -- wanted to break the stranglehold of a system that had been built under Stalin. Millions of people were saying: "We can no longer live like this."

Discuss.

[Sushi]

Rumors of the (impending) death of free-market capitalism have been greatly exaggerated.

While I do agree that reforms are needed (reforms are ALWAYS needed) I do not believe we are seeing the death throes of an entire economic system decayed beyond hope of cure. I disagree with the author's basic thesis that "The current model does not need adjusting; it needs replacing."

IMHO the most important thing we need is to get a bit less Keynesian and make thrift fashionable again. We people to realize that living in debt (at the personal, corporate, or government level) is a terrible long-term strategy. It may let you get your plasma TV (at the personal level) or cool new government program (at the government level) now, but it sets you up for paying a hefty price down the road.

[Goober5000]

IMHO the most important thing we need is to get a bit less Keynesian and make thrift fashionable again. We people to realize that living in debt (at the personal, corporate, or government level) is a terrible long-term strategy. It may let you get your plasma TV (at the personal level) or cool new government program (at the government level) now, but it sets you up for paying a hefty price down the road.

[General Battuta]

IMHO the most important thing we need is to get a bit less Keynesian and make thrift fashionable again. We people to realize that living in debt (at the personal, corporate, or government level) is a terrible long-term strategy. It may let you get your plasma TV (at the personal level) or cool new government program (at the government level) now, but it sets you up for paying a hefty price down the road.

Concur. We need more Clinton, less Bush. I'm a supporter of a lot of Obama's policies, but I wish he were more fiscally conservative.

[karajorma]

IMHO the most important thing we need is to get a bit less Keynesian and make thrift fashionable again. We people to realize that living in debt (at the personal, corporate, or government level) is a terrible long-term strategy. It may let you get your plasma TV (at the personal level) or cool new government program (at the government level) now, but it sets you up for paying a hefty price down the road.

You do realise that changing that on the level of the government would be a replacement of the current system of course, not just an adjustment.

[Kosh]

Concur. We need more Clinton, less Bush. I'm a supporter of a lot of Obama's policies, but I wish he were more fiscally conservative.

To be fair the current deficeits were a result of 8 years of Bush's reckless tax cuts and increased spending combined with a major recession. Obama inherited a huge mess, and it will take years for things to get better.

[Mikes]

The reason why Communism didn't work too well, was that their solution to the problems of capitalism, as diagnosed by Marx, was basically the amputation of functional systems that had evolved in society for a reason.
In other words, it worked as well as cutting off an arm and a leg to fix an itch lol

The problem that we are seeing now however is, that after years of ultra liberal and deregulation policies the very same problems that Marx originally diagnosed are coming back to bite us in the butt. You see... Marx was right in so far that he quite clearly saw the problems that capitalism would run into in the long term, that wasn't the problem with his theories... the problem rather was that he didn't have a solution for the problem.
(It's a bit simplistic to sum up this quite complex topic, so feel free to nitpick. It's of course a quite complex matter, but i don't know how to sum it up better in two sentences )

At the heart of the issue is that democracy depends on the free market. But capitalism and free markets do not really depend on democracy, which is becoming more and more painfully obvious the longer this "farce" of a financial crisis is going on. Ultimately it will come down to either preserving democracy through a regulation of free markets and capital flows, or sacrificing democracy on the altar of a globally unleashed capitalism without boundaries and frankly...  and frankly, the later prospect makes me worry.

[General Battuta]

If the 'problems are coming back to bite us in the butt', why are depressions less frequent and less severe than ever in our nation's history?

Monetary policy seems to be working well. Fiscal policy not so much, but monetary policy is pretty solid.

[IceFire]

I see things fairly simply here....pure communism doesn't work.  Pure capitalism doesn't work.  Extremes never work except for a few who benefit for a time and then the whole thing comes crashing down.  Note that the US nor anywhere else in the Western world that I can think of has a purely capitalistic system.  It needs regulation...pure and simple.  In a round about way thats why the economic system in Canada is so much further ahead by nearly all analyst predictions than any of the other G8 countries.

[BlueFlames]

At the heart of the issue is that democracy depends on the free market.

Explain how a political system depends so heavily on an economic system.  I'm in need of a good laugh.

[Mikes]

At the heart of the issue is that democracy depends on the free market.

Explain how a political system depends so heavily on an economic system.  I'm in need of a good laugh.

We know two ways to coordinate an economy. Free Markets and Central Planning.

For some reason i really can't get my head around how a decomocray with central planning would work would go against the whole freedom principle and pretty much anything else democracy is fond of lol.

So yes... democracy depends on a free markets of some kind, in some form.
What we are just finding out right now is that "total" market control without ANY kind of regulation will ultimately abolish democracy.
The problem is quite complex but the underlaying reason can be explained quite easily really... markets are global and capital/finances can move globally.
Democracy is still bound by nations and as a society we are certainly not even close to being ready for some kind of "world government" yet.

Therefore financial power centers / capital becomes more and more significant, while national political power declines. It's a process and it doesn't happen all at once overnight, but it progresses just a bit further every year.
That's not a prognosis, that's observable fact and has been quite obvious for several years lol.

Quite dusty economic theory prognosed that it's a great process and that free trade would ultimately allow every country to specialize and become wealthier in the process. The sad ugly truth however is that globally, US living standards would be simply unsustainable. Resources are scarce already and ecological catastrophe is  creeping up on us as is lol. Yet the conundrum is that while yes... on a global scale it's quite unfair that the western countries use up that many resourcers, the flipside of the medal is that if the western states fall into poverty due to global economic exploitation we will likely also see a quite severe stagnation in technological innovation which matter of fact is the one sole chance  we do have for ultimately improving living conditions - globally lol.

Which of course also points a finger at the embarassment of current governmental spending on education and research...

[Sushi]

Monetary policy seems to be working well. Fiscal policy not so much, but monetary policy is pretty solid.

What's the difference? Of course I can Google it, but I'm curious how you define the distinction.

[General Battuta]

Fiscal policy is set by the federal government, monetary policy by the Fed. One is a matter of government spending, the other is control of the money supply.

[BlueFlames]

For some reason i really can't get my head around how a decomocray with central planning would work.

It's not that difficult a concept to fathom:  The people making the plan get elected by popular vote in a campaign against other candidates for the position.  It's not how the Soviet Union worked (though Gorbachev was pushing for multi-candidate elections as part of the Perestroika reforms), but there are more countries in the world than the United States and the former Soviet Union.  Do some reading on the post-war United Kingdom through the 1970's.  What you'll find is that it was the same representative government they have today, headed by a Socialist party, running a planned economy.  Bureaucratic micromanagement, among other things, did quite a job killing their economy, but they still had a democratic political system, and a centrally planned economy.

What we are just finding out right now is that "total" market control without ANY kind of regulation will ultimately abolish democracy.

Again, show me the inherent link between the political and economic systems.  An unregulated market isn't going to burn the Constitution, even if the economy spirals into a depression from which it can't recover.  Foreign invaders, exploiting the nation's inability to fund an army might, but war, in a broad sense, is a political action, committed by one state against another, not an economic act.

[Bobboau]

I think what he is getting at is that if people do not have the ability to sell their labor and spend the fruits of that labor however they like then they do not have control over their own lives and thus are not personally empowered and thus not free, though it doesn't mean we can't all vote on what we are going to do with the money we have taken from everybody. it is theoretically possible to have a democratic communist state, it's just does not seem like a natural fit.


personally I think the biggest problem with our current economic system is the abuse of credit, if we simply waited until we had sufficient capitol to do **** we'd be in a much healthier state.

[Liberator]

Concur. We need more Clinton, less Bush. I'm a supporter of a lot of Obama's policies, but I wish he were more fiscally conservative.

To be fair the current deficeits were a result of 8 years of Bush's reckless tax cuts and increased spending combined with a major recession. Obama inherited a huge mess, and it will take years for things to get better.

"Reckless tax cuts"

You realize that by allowing people to keep more of they're money that the economy, and by extension the Government's portion of that, grows by larger factor than simply raising taxes.  Generally speaking at any rate.

Similarly, you cannot continue to soak the rich to make up for not having enough money to do everything you want as a government.  They'll pick up they're toys and leave cause they can.  Then who will you demonize while you take the majority of the wealth they created by investing they're money?

Speaking of deficits, if Obama gets everything he wants, we'll go from Bush's horrific tripling of the deficit during his term to, going from approx. 1 trillion(with a "t") dollars to 3 trillion, or about 1/5 of the USA's 15 trillion dollar GDP, to something that, from a financial perspective is like looking into the maw of hell itself, I've heard figures of as little as 12 trillion(4/5 the USA's GDP) to as high as 20 trillion.  That's enough of a deficit that my grandkids will still be paying taxes to cover the first year of this monstrosity.

And don't get me started on Government Motors.  They're never going to become profitable because they only going to make these little "putt-putt" cars that are unsafe and uncomfortable to ride in.  The only problem is there won't be a choice because it's impossible to compete with Government in the picture so Ford, the only freely owned US car company left, will be forced out of business by an increasingly demanding Car Czar who only reports to His Highness, The Annointed One, He who causes Orgasms in the Media, President Barack Hussien Obama.  5 years, you watch, in 5 years there won't be a Ford Motor company any more.  And the only choice in automobiles will be the 2 door or the 4 door tin can that is dead last in safety standards compared to European and Japanese models.  They'll probaly look like a scaled back version of this thing:
http://www.nissanusa.com/configurator/en?service=external/SelectBodyStyle&mo=2009:cbe&next=See_All_Vehicles:Build.Link2

[BlueFlames]

Government Motors ... His Highness, The Annointed One, He who causes Orgasms in the Media, President Barack Hussien Obama.  5 years, you watch, in 5 years there won't be a Ford Motor company any more.

Did Sean Hannity tell you to get angry on the internet, or did you come up with that all by yourself?

Seriously, your post started as reasonably as advocacy of trickle-down economics can.  Then it turned into unsourced claims about the deficit, which I was willing to ignore, as most posts don't come with a works cited page, but the rant at the end is just ludicrous.

If GM is going to be forced to make an inferior product, how exactly is that going to cause Ford to evaporate?  You've contradicted yourself, unless you believe that Ford is going to be making the same type of product, due to market forces.  More to the point, though, you're ignoring the precedent being set by Chrystler, also under government stewardship for the moment.  They've been sold to Fiat, who will take a majority share in the company, once Chrystler has paid back what it owes the government, on the condition that they do not close Chrystler plants in the United States.  It's pretty plain that the US government doesn't want any part of the car industry in the long-term, unless you're trying really hard to ignore the facts.  The only reason they've taken control of automakers in the short-term is to keep the manufacturing wing of the auto industry from being shipped entirely overseas.  It's all well and good to say that, "In a free market, strong companies will replace the weak," but in a globalized economy, if those strong companies exist overseas, the jobs lost as the weak company fails never return.  The goal is keeping US jobs in the US, not limiting choice.

[SpardaSon21]

Ford won't be able to compete because GM will be receiving tons of money from the Federal government.  If GM is too big to fail now, wait until the government starts throwing money at GM in order to preserve the value of its 60% ownership.

[IceFire]

Ford won't be able to compete because GM will be receiving tons of money from the Federal government.  If GM is too big to fail now, wait until the government starts throwing money at GM in order to preserve the value of its 60% ownership.

Not that I would...but if you believe whats being said then the idea is for the US government to decrease its ownership over GM as a return on investment is paid out.  That said I think Ford has little to worry about for three reasons:

1) The folks they have in charge right now are finally making the right decisions
2) Their R&D efforts are paying off in the form of the new EcoBoost I4 and V6 engines plus an all new V8 for certain applications.  Right now its the EcoBoost V6 thats big....but soon it'll be in 90% of the lineup.
3) They have some excellent new cars already here or coming very soon.  The Fiesta, the 2010 Fusion, the new Fusion Hybrid which is pretty much the best hybrid for nearly any money right now, the Lincoln MKS, 2010 Taurus (and SHO!) and to lesser extents the Flex and Edge.  What they need is a new Focus...which is on the way.

So I think Ford will be fine...on their own merits entirely.  They have finally figured out that they cannot rely on a truck to be their top seller.  It'll still be key to their plans but their success won't ride on it.

[Mikes]

If the 'problems are coming back to bite us in the butt', why are depressions less frequent and less severe than ever in our nation's history?

Monetary policy seems to be working well. Fiscal policy not so much, but monetary policy is pretty solid.

There were less depressions because of agressive interventionism and fiscal policies.
And yes...all the "crisis" that didn't happen are, in very simplified terms, indeed now coming back to bite us in the butt.
You just have to look at the development of interest rates to see whats up. Everytime the fed lowered interest rates to smoothen or avert a "bump" in the economic trend they basically made it cheaper to take a loan.
In other words, the "growth of the economy" that is required to keep the system stable is funded by debt. If you look at it this way then what you are seeing now is the effect of a gigantic "value correction", except that the system is too fragile, it only function properly within certain limitations, that it could survive such a value correction if it actually occurs in full force...   that's why... bad banks, more money, cheaper money, more loans!

It's basically Enron on a global scale and Andy Fastows (Enron CFO) metaphor is as accurate as ever: Feeding the Beast. Enron was a bit further down the road and a bit more "innovative" (which here basically reads: more semilegal/illegal/morally questionable) but the basic evolution of the problem can already be observed on a smaller scale.

Problem is... the beasts hunger is unsustainable in the longterm. And after 50-60 years of peace we are getting uncomfortably close to the realities of "longterm" lol.

The problem is that its practically a natural evolution of competition that reaches legal boundaries and finds little room to grow.
And as far as the financial markets go... the growth limit has already been overextended. The whole system right now rests on a huge amount of incredibly risky debt.
That debt hasn't been nearly paid off, not even close... and as more and more debtors will fold the system will get (and already has gotten) into a huge amount of trouble.

The sad thing is, is that you can read about this "evolution" pretty much step by step as it now happened in papers from the 1990  or even earlier already,
including the upcoming results of the "bad bank TM" that can be pretty much seen as the prequal of "oups our nation's broke"

For reference. National bancruptcy, or technically more accurate, "insolvency" occurs once the nation's financial obligations (including interest for debt, infrastructure, police and other organs etc.) exceeds they ability to satisfy them. The problem is... that once you go past a certain point of national debt, rating agencies will downgrade the rating, basically making new debt more expensive and thus accelerating the process into actual insolvency.

Now from a pragmatic point of view national bancruptcy is decided much sooner. And that is at the moment that it appears to be easier to go for a national default than actually pay back all your debt.
Some people would therefore say staterun "bad banks" is pretty much "Red Alert". lol.

Well... and after a nations finances fold, what ya think will happen ? The big corporates to the rescue ? Wasn't it the government supposed to be rescuing them? Well yeah... but you really think anyone is gonna remember that and help the GOVERNMENT out in return ? Hah, they'll be the first to exploit the impotent government, make it outright irrelevant, who knows, maybe take it over for good, or simply leave for greener pastures if things become too unstable lol. That is the next projection... ironically the countries who have been catering to the deregulation and market liberalizaton agenda the greatest, will get hit the hardest. With a lack of social nets and medical care insurance a nation and society as a whole gets down in the gutter really fast as unemployment rises, but the kicker is of course taking over corporate debt from companies that will instantly turn around and basically say "k thanks bye now DIE!" lol.

See, as long as the capitalistic system is still young... a crisis here and there is no big deal. You lower interest rates and voila it grows again as if nothing happened. But at the heart that notion of lowering interests to make taking debt more appealing to keep the economy running is little else than a giant ponzi scheme. It needs to grow, or it collapses. Even if growth just gets disturbed a little bit too badly for a while. It collapses.

In the most simplistic terms. Karl Marx was indeed mostly right in his analysis of the problems of capitalism. The problem was that the "thought" he also had a solution and well, we all know how that ended.
But just because Communism turned out to be an abomination even worse than what it was trying to fix is sadly of little help in the mess we are currently in.
The problem was to assume that just because Communism collapsed, Capitalism was perfect. Classic fallacy.

But if Communism has thaught us anything, then its how dangerous the presumption to have found the "perfect social theory"  actually is, so there are no easy solutions to the problems we face now. ESPECIALLY since no one even bothered to look after "capitalism won over communism", all fine now. our systems better! we win! woot! ... well, sadly, not that simple.


If anything then everything was so much easier as it was still all about Commies vs Capitalists ... because if anyone disagreed with one side they could be told to "well why, go over join them if you like them so much loser!!!" ...  today, we don't have the luxury of simplicity and have to actually face up to real issues that need to be fixed lol :/

If you wanted to find reason within the economic theory itself, you could say Capitalism has become complacent and ignorant of its own problems because of... a lack of competition. Call it ideologic monopolism ? LOL Ironic ? yeah, also way too simplistic but who cares anymore. Simpliscity & Ignorance has been all the rage for the last 8 years after all lol :coughs:

Seriously, without Bush we propably could have lived at least 10-20 years longer in complacency before facing up to inherent problems of capitalism of this magnitude LOL. And who knows, maybe some technology based boom or the other would have carried us over another 10... but that's a moot point. George W. was quite the catalyst in that way. lol